{"id":23101,"date":"2020-08-29T00:01:25","date_gmt":"2020-08-28T23:01:25","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=23101"},"modified":"2024-02-23T15:28:00","modified_gmt":"2024-02-23T15:28:00","slug":"voneus-ceo-on-the-unrealistic-2025-uk-gigabit-broadband-target","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2020\/08\/voneus-ceo-on-the-unrealistic-2025-uk-gigabit-broadband-target.html","title":{"rendered":"Voneus CEO on the “unrealistic” 2025 UK Gigabit Broadband Target"},"content":{"rendered":"

The Founder and CEO of broadband ISP Voneus<\/a>, Steve Leighton, has told ISPreview.co.uk in a new interview that the 2025 target for every UK home to gain access to gigabit-capable broadband is “unrealistic<\/em>” and that Ofcom<\/a>’s approach to regulation needs to take more account of alternative networks (AltNets).<\/p>\n

As a business Voneus<\/a> has actually been around for a good 8 years or so, although they initially spent most of that time on developing products and services for the Voice-over-Internet-Protocol (VoIP) market. By comparison they’ve only really been active in the broadband connectivity sector for 3-4 years.<\/p>\n

On the broadband side the ISP has been primarily focused on developing Fixed Wireless Access<\/strong> (FWA) networks for poorly serve villages and towns across various different parts of England (mostly rural areas), with a little bit in Wales. Customers of these services typically pay from about \u00a334.99 per month for an unlimited 30-50Mbps capable superfast broadband service, which comes with a free router and installation.<\/p>\n

So far most of that has been powered by a 2017 funding injection of \u00a32.4 million from BOOST&Co and, more recently, they’ve also secured an initial commitment of \u00a310m from Macquarie Capital, which includes the potential to invest up to \u00a330m in phases (here<\/a>). As part of that Voneus<\/a> are looking to grow their FWA coverage and to expand into doing more Fibre-to-the-Premises<\/strong> (FTTP<\/a>) deployments (they have started some in Devon, Bedfordshire, Somerset and Buckinghamshire).<\/p>\n

NOTE:<\/strong> As a result of the latest investment Voneus is targeting a potentially addressable market of c.900,000 homes.<\/div>\n

Suffice to say that we were keen to know where the ISP stood on some of the major developments currently taking place, such as the Government’s \u00a35bn aspiration to bring “gigabit-capable<\/em>” broadband to every UK home by the end of 2025 (here<\/a> and here<\/a>). Steve Leighton<\/strong>, CEO of Voneus, thinks this target is “unrealistic<\/em>” and he also wants to see the current business rates holiday on new fibre (due to end in 2022) being extended so that ISPs can properly plan their investments for the future.<\/p>\n

On top of that Steve notes that competition for skilled engineers is starting to mean that “resources are becoming increasingly scarce in the industry<\/em>” and extremely good engineers in particular are “now starting to command a premium<\/em>,” which is something that can impact the cost models that providers make for their deployments. We touch on all of this in more detail below.<\/p>\n

The Voneus Interview (Steve Leighton)
\n<\/strong><\/span><\/h3>\n

Q1. Voneus started out by building hybrid fibre optic and fixed wireless broadband networks in order to serve poorly connected communities, often in rural areas. More recently you\u2019ve begun a number of Fibre-to-the-Premises (FTTP<\/a>) builds, can you tell us a little more about why you\u2019ve started to harness full fibre and what sort of new challenges it has presented?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

The utopian vision is for a full fibre UK. The Government\u2019s views on this outcome have softened recently, with the emphasis being placed much more on a \u2018Gigabit Britain\u2019. This has opened the door for alternative technologies to be used in solving the country\u2019s connectivity problem.<\/p>\n

Our strategy is very simple. We will continue to serve the rural areas that are underserved by superfast broadband, doing so initially through our Fixed Wireless Access solution. Significantly, FWA is very quick to deploy. By using this technology we can get a community on-line and connected to a superfast service extremely swiftly.<\/p>\n

Then, when that community reaches a certain level of take-up, we will deploy fibre, confident in the knowledge that our investment will accrue revenues from day one. This approach mitigates some of the risk associated with an expensive investment in rural fibre.<\/p>\n

Therefore, one of the key challenges with rural FTTP<\/a> deployment is ensuring that we have effective clustering and available fibre backhaul points to provide the economies needed for a full fibre rollout.<\/p><\/blockquote>\n

Q2. At present Voneus\u2019 existing network connects around 5,000 UK premises (with more added daily), although you\u2019ve recently secured an additional investment of \u00a330m and have spoken of an aspiration to cover 900,000 premises.<\/strong><\/p>\n

Are you able to tell us a little more about when you expect to hit that 900,000 aspiration, how you intend to invest the extra money in order to achieve that and how many premises from the target might benefit from FTTP rather than wireless services?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

At the time of the Macquarie investment 900,000 homes was quoted as the potential scale of the number of addressable homes in rural, poorly connected communities in the UK, highlighting the troubling extent of the UK\u2019s broadband divide. These are typically defined as homes receiving less than 10Mbps today.<\/p>\n

Our aspiration over the next 3-5 years is to grow our customer base significantly, using our investment to grow our FWA networks, as well as building FTTP infrastructure for a large number of our communities across the UK, with a strong focus on homes connected rather than homes passed.<\/p>\n

We are not short of opportunities and continue to both discover and receive inbound enquiries from communities across the UK who receive speeds of less than 10Mbps. We are supporting our organic growth with strategic acquisitions designed to bring us customers, skills and communities with the potential for fibre rollout.<\/p>\n

We are well on our way with that journey, and I think the next 6-12 months will represent a very exciting time for the company as we continue to realise our double-digit growth plans.<\/p>\n

Although our investment will fuel our buy and build strategy, we know the importance of ensuring the business, its people, and our systems scale in the same manner. With this in mind, we have made a number of strategic senior management hires from across the Telco sector to provide further insight and experience.<\/p><\/blockquote>\n

Q3. We note that Voneus has, on occasion, come close to crossing some of your wireless or fibre network coverage with that of a rival other than Openreach<\/a>, such as Truespeed<\/a> or Gigaclear<\/a>. As a provider, how do you approach the issue or threat of overbuild with a rival and what sort of impact can or does it have on your plans?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

We recognise that the UK broadband market is a competitive marketplace. The presence of alternative networks and the sharp increase of private investment in this space over the last few years demonstrates the existence of the opportunity which much of the industry is trying to take advantage of.<\/p>\n

To mitigate the impact of this competition, we use data and established criteria to decide where to implement our buy\/build strategy, enabling us to spend our money wisely and achieve the best ROI, especially where we have first mover advantage. We avoid knocking on the doors of our competitors\u2019 customers because our view is that the market is big enough to avoid treading on the toes of others. Why overbuild and compete when there are other, significant areas with little to no connectivity that we can focus on helping instead?<\/p>\n

However, as you point out, in some of our legacy sites, there has been some overbuild, which has established a new level of competition. Our approach in these areas is to continue to excel in providing the best possible service to our customers, which in our books encompasses superfast, reliable broadband with excellent customer service. Our local customer engagement model means that our customer base often feels a strong affinity with Voneus, which is hugely helpful moving forward as we look to take them on a journey to FTTP.<\/p><\/blockquote>\n

Q4. If you could change one rule or element of the current market to help your roll-out, what would it be?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

For rural delivery we\u2019d like to use all the existing UK infrastructure to improve the speed for delivery and also to help reduce cost. As an example of this approach, \u201cOpen Fibre\u201d in Italy have shown that by using the power networks infrastructure, FTTP can be deployed rapidly.<\/p><\/blockquote>\n

NOTE:<\/strong> The UK Gov are currently consulting on the use or re-use of existing infrastructure (here<\/a>).<\/div>\n

Q5. The Government has recently been through a fair few rapid broadband policy changes. At the start of 2019 the plan was still to achieve full fibre coverage of every home by 2033 (viable), then it became 2025 (virtually impossible), before finally being watered down to simply \u201cgigabit-capable broadband\u201d by 2025 (this expanded the technology options beyond just FTTP to add Virgin Media<\/a>\u2019s DOCSIS<\/a> 3.1 cable network and possibly also fixed wireless broadband or 5G<\/a>).<\/strong><\/p>\n

Since then the Prime Minister, Boris Johnson, has announced that he will facilitate the new 2025 target by investing \u00a35bn of public money to help bring Gigabit broadband to those in the hardest to reach (final 20%) of premises. Given all of this, what are your thoughts on the viability of the new 2025 target and do you have any recommendations for how the funding should be spent?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

I\u2019m not alone in thinking the 2025 target is unrealistic, even given the recent change in emphasis. We\u2019d need to increase current rates of build across the board (I.E. all businesses that are currently building networks designed to deliver Gigabit-capable services) by a significant factor to meet that. However, as you say, support schemes exist to help soften the investment risks when delivering this broadband rurally.<\/p>\n

However, the current scheme (the rural Gigabit voucher scheme) is due to come to an end in March 2021. This makes no sense in my view \u2013 if the vision is for a Gigabit Britain by 2025, the scheme should continue to run until then at the very least.<\/p>\n

What is clear is that the initial \u00a35bn has not been completely spent. With this in mind, companies like Voneus should be allowed to continue to build, with some level of support from the Government. Removing that support won\u2019t stop the build, because the demand will always be there, but it might slow down its progress, and contribute to missing the Government\u2019s 2025 deadline.<\/p><\/blockquote>\n

NOTE:<\/strong> We expect the new \u00a35bn gigabit programme to include a continuation of the rural voucher scheme beyond 2021 (here<\/a>).<\/div>\n

Flick over to page 2 to continue this interview.<\/p>\n

<\/p>\n

Q6. In keeping with the above, Ofcom<\/a> has begun to consult on some of the changes that might be needed in order to help facilitate investment in new full fibre and Gigabit-capable broadband networks (here<\/a> and here<\/a>). <\/strong><\/p>\n

Many of the proposals relate specifically to Openreach<\/a>, but some – such as migration processes for full fibre networks (moving away from copper), a new Dark Fibre product and regulation that varies by geographic area \u2013 may also affect other providers.<\/strong><\/p>\n

What are your thoughts on Ofcom<\/a>\u2019s proposals and do you think that they need to make any other changes in order to help the investment case and roll-out of such networks?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

Ofcom\u2019s recent proposals contained within the FTMR is something we are aware of and something we are working with our industry partners, INCA, WISPA and ISPA<\/a> to respond to.<\/p>\n

In particular, the way Ofcom is looking to divide the country into three areas is a cause for some concern, especially in relation to Area 3. It is imperative for the UK to create the right environment for Alt Nets and their investors to succeed in providing Gigabit-capable speeds to all areas of the UK, especially the hard-to-reach, rural areas.<\/p>\n

As it stands, Ofcom\u2019s approach seems to offer preferential terms to Openreach<\/a>, incentivising their ability to build in Area 3, which is likely to cause further overbuild, and thus reduce the appetite for private investment in businesses with a rural focus.<\/p>\n

We would therefore welcome Ofcom reviewing their position to incorporate a recognition that companies such as Voneus are in a great position to offer Gigabit speeds to customers across the UK. To enable this, it is critical that the regulatory environment incentivises investment, rather than stifling it.<\/p><\/blockquote>\n

Q7. The Government\u2019s new 2025 target also appears to suggest that 5G<\/a> mobile and fixed wireless services could qualify as Gigabit-capable. This is potentially tedious given the extremely variable nature of mobile connectivity, its dependence on getting access to lots of spectrum (more difficult in rural areas) and ample backhaul capacity to feed that \u2013 among other things.<\/strong><\/p>\n

What are your thoughts on this; should 5G<\/a> and fixed wireless form part of the technology solution for the target and, if so, then how should the Government go about ensuring that it can actually deliver 1Gbps speeds into areas where it\u2019s deployed?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

Wireless should form part of a heterogeneous connectivity strategy; a strategy that recognises the intrinsic differences between wireless technologies and products. FWA is a fixed broadband product designed to both operate and have the technical flexibility of a managed internet access product. It is a solid substitute for fixed line technology and can deliver high-speeds and the high level of performance, customisation, and interoperability that customers expect.<\/p>\n

Conversely, an MNO 5G product is all about mobile connectivity designed to provide a solution to today\u2019s needs alongside those of the future (IoT is often quoted as an example here) through equipment containing a SIM card.<\/p>\n

That being said, there is probably an overlap \u2013 to many the outcome may look the same and have comparable price points. However, with radio technology such as modulation techniques improving all the time, and thus allowing for Gigabit+ transmission speeds at commodity prices, it would be imprudent for the Government to dismiss out of hand wireless providers that aren\u2019t MNOs, since this might mean that connectivity targets would take even longer to achieve.<\/p><\/blockquote>\n

Q8. Commercial competition between full fibre providers in urban areas has become increasingly aggressive. Indeed over the past few months we\u2019ve started to see more examples where three providers have all built networks in the same area (overbuild).<\/strong><\/p>\n

The Government\u2019s 2018 Future Telecoms Infrastructure Review made clear that “at least a third (with the potential to be substantially higher) of UK premises are likely to be able to support three or more competing gigabit-capable networks<\/em>.”<\/strong><\/p>\n

On the one hand this gives consumers extra choice and a better chance of getting a good deal. On the other hand, locals suffer more disruption from multiple builds, while overbuild does little to improve overall UK coverage and can also make it harder for providers to attract investment by stretching the payback period or risk. What is your position on all this?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

In an ideal scenario, ISPs, large and small, would work in conjunction with each other to reduce overlap and ensure customers across the UK see improved speed coverage. Yet, against an increasingly competitive landscape, we are aware that this is highly unlikely and our strategy and business model therefore have to reflect this market climate.<\/p>\n

To this end, we are constantly assessing the competition (active and latent) to understand where we have the biggest opportunity to provide an unparalleled service to customers, providing the best possible stimulus to succeed. Again, rather than moving forward with a speculative fibre first approach, we move quickly to bridge the gap by providing an initial FWA solution, allowing customers to achieve superfast speeds in the short term. As referenced earlier, our plan is then to convert them onto an FTTP service once we reach a certain level of engagement within the community.<\/p>\n

Where our existing sites attract overbuild, we again rely on the quality of our service and customer-brand affinity to retain our customers.<\/p>\n

Our investors are very supportive of our long-term strategy and continue to provide us with the momentum and investment necessary to scale the business.<\/p><\/blockquote>\n

Q9. Fears have been raised from a number of quarters, including privately by some other ISPs, that the rush by various companies to build full fibre networks may be putting a strain on the supply of skilled engineers (i.e. demand outstripping supply). Have you experienced this and, if so, what sort of impact can it have and what do you think needs to happen in order to resolve it (should the Government be making any changes to facilitate this)?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

Yes, resources are becoming increasingly scarce in the industry, with extremely good engineers now starting to command a premium. Much of the skilled labour in recent years has come from across Europe to support the Government\u2019s own targets, and this may well be an area that needs to be reviewed.<\/p>\n

Additionally, with large redundancies being muted in businesses such as Centrica, it could be an opportune moment to provide a national reskilling or retraining programme to help towards overcoming this deficit.<\/p><\/blockquote>\n

Q10. In some more mature countries for full fibre infrastructure we\u2019ve seen competition between ISPs shift, with rivals offering ridiculously fast headline (advertised) speeds of 10Gbps, and in some cases even 20Gbps, for consumers. This is despite the fact that none of their customers would ever even get close to harnessing the full performance of such connectivity. When do you think we\u2019ll start to see UK ISPs competing over multi-Gigabit speeds like this?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

As it stands, there just isn\u2019t the need for the majority of households to require even 1Gbps speeds, never mind 10Gbps.<\/p>\n

Our focus at Voneus is trying to provide customers who receive less than 10Mbps with a service which will initially see them receive 30Mbps to 50Mbps symmetrically, speeds which are completely transformational for the communities we serve. Moving forward, we recognise that a demand for greater speeds will continue to evolve, and that\u2019s why the emergence of Gigabit speed technology is so important to the nation.<\/p>\n

The emergence of Smart Home devices, IPTV and the recent shift to working from home will all play a role in customers demanding greater and more reliable speeds. This, in conjunction with the larger ISPs now offering FTTP nationally (Sky, BT<\/a>, Talk Talk), means that a 100-115Mbps product will become the entry-level proposition for many customers. Early adopters and tech savvy customers will desire higher speeds, yet my perception is that this will remain a niche market for the next few years, with ISPs concentrating more closely on shifting their customers from FTTC<\/a> to FTTP technology on a lower-tiered product to minimise higher monthly costs.<\/p>\n

I\u2019ve no doubt that multi-Gigabit speeds will become in demand, however, it will take a seismic shift in technology and new devices to create a market for that type of product.<\/p><\/blockquote>\n

NOTE:<\/strong> B4RN<\/a> recently launched a 10Gbps package for homes, while Zzoomm<\/a> has added a 2Gbps service and Black Fibre (Telcom) can also do 10Gbps for some apartment blocks.<\/div>\n

Q11. The Government recently decided to ban Huawei\u2019s kit and services \u2013 as well as other high-risk vendors (e.g. ZTE) – from being deployed into core UK broadband and mobile networks. At the same time, they imposed a cap on the amount of non-core kit that could be deployed from the same suppliers. What are your thoughts on this and has it had any impact on your own service?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

We\u2019ve been watching with interest as the debates have developed. Even for a company our size, it\u2019s prudent not to be tied to a sole supplier and so we work with a number of suppliers in the building and maintaining of our network. We have had a few discussions in the 5G space but currently the number of economically viable solutions is quite limited when operating rurally.<\/p>\n

For FTTP there are a number of competing vendors all vying for space in the UK and this has certainly helped us in finding good suppliers to work with.<\/p><\/blockquote>\n

Q12. At present 2020 is shaping up to be a very different year from previous ones, not least due to the impact of the COVID-19 (Coronavirus) on complex supply chains and network deployments. Can you tell us a bit about what sort of impact the pandemic has had on your company, if any, and how you\u2019ve had to adapt?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

It’s been a challenging period. Usage on the network has hit, and remained at, our pre-CV19 daily peak. In short, our customers have definitely been relying on our networks! We\u2019re really pleased with how our services have performed during this period of unprecedented increased demand.<\/p>\n

In all honesty, availability of hardware has not really been a significant issue. There were good stocks available within the UK and we bought a large amount early on to ensure we could continue to serve those customers who had a real need for an improved service.<\/p>\n

In terms of customer interactions, we\u2019ve also faced some challenges. Our community engagement team usually visits any potential new communities to speak to the residents about our plans. We\u2019ve not been able to communicate with these potential customers in the same way, although conversations as a result of inbound enquiries from new communities has remained as strong as ever.<\/p>\n

We\u2019ve also continued to install during the period, ensuring that our engineers wear all the appropriate and necessary PPE when entering a customer\u2019s premise. Full coverage disposable bio suits, masks, goggles, gloves and overshoes have been mandatory for every customer visit. We take the safety of both our customers and our employees incredibly seriously.<\/p><\/blockquote>\n

Q13. Finally, the UK Government is currently providing a 5-year relief from business rates on new fibre and Scotland has just pushed this to 10 years. Do you think that the UK should be extending their 5-year relief further, such as to 10-15 years, and if so, then why?<\/strong><\/p>\n

ANSWER:<\/u><\/p>\n

We are all aware of the Government\u2019s ambition to provide Gigabit speeds to every household across the UK by 2025. To achieve this we need further investment, meaning it\u2019s important that incentives \u2013 such as rates relief \u2013 continue far into the future, enabling companies like ours to plan ahead with greater certainty and clear visibility of a sensible ROI.<\/p>\n

The Government must balance out this need for certainty by providing the correct level of incentive to generate demand in the short term. Right now, it\u2019s difficult to imagine that the whole of the UK will be Gigabit-capable by 2025. I think the UK Government could perhaps learn some lessons from its counterparts up in Scotland and push out reliefs for a further 5 years.<\/p><\/blockquote>\n

We’d just like to thank Steve Leighton for taking the time to engage with our questions and we look forward to seeing how Voneus progresses.<\/p>\n

UPDATE 30th Aug 2020<\/strong><\/p>\n

Corrected the BOOST&Co investment figure from \u00a39m to \u00a32.4m.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Founder and CEO of broadband ISP Voneus, Steve Leighton, has told ISPreview.co.uk in a new interview that the 2025 target for every UK home to gain access to gigabit-capable broadband is “unrealistic” and that Ofcom’s approach to regulation needs to take more account of alternative networks (AltNets).<\/p>\n","protected":false},"author":1,"featured_media":23103,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[2716,1],"tags":[65,56,1650,476],"class_list":["post-23101","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interviews","category-uk_isp_news","tag-ftth","tag-fttp","tag-voneus","tag-wifi"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nVoneus CEO on the "unrealistic" 2025 UK Gigabit Broadband Target - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The Founder and CEO of broadband ISP Voneus, Steve Leighton, has told ISPreview.co.uk in a new interview that the 2025 target for every UK home to gain\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2020\/08\/voneus-ceo-on-the-unrealistic-2025-uk-gigabit-broadband-target.html\" \/>\n<link rel=\"next\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2020\/08\/voneus-ceo-on-the-unrealistic-2025-uk-gigabit-broadband-target.html\/2\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Voneus CEO on the "unrealistic" 2025 UK Gigabit Broadband Target - 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